Friday, July 12, 2013

District, foe squabble over contract

McKinstry seeks to have document declared legal

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By TERRY SMITH
Express Staff Writer

    The nature of a construction contract and what provisions of Idaho law govern it has become a new hot issue between the Blaine County School District and energy contractor McKinstry Essention in continuing litigation between the parties.
    McKinstry attorneys filed a motion Monday in Blaine County 5th District Court seeking a summary judgment declaring the contract legal. According to court records, attorneys for the School District plan to file a motion seeking to have the contract declared illegal.
    The district asserts in various court filings that if the contract is declared illegal, “all monies paid to McKinstry by district should be disgorged and returned to district.”
    The School District and McKinstry litigation started in May 2012. It stems from a contract that the parties entered into in 2010 for energy savings work and other improvements at eight district schools and facilities.
    McKinstry claims it performed work worth about $26 million and that the district still owes the company about $7 million. The district maintains that it authorized work worth only $18.6 million and is seeking damages for at least that amount.
    The case is scheduled for trial before Judge Robert Elgee beginning in April.
    McKinstry is claiming that the contract is valid because the district was legally permitted to enter into it under Idaho Code 67-2309, which authorizes public officials to enter into construction contracts. That code provision does not require that guaranteed energy savings be part of a contract.
    The School District claims that the contract was entered into under Idaho Code 67-5711D, which provides for energy savings performance contracts wherein the contractor agrees to guarantee energy savings.
    The contract between the School District and McKinstry does not specify under which law the contract was written, but it does appear to more closely align with the provisions of 67-5711D.
    District Communications Director Heather Crocker characterized the McKinstry motion for summary judgment as another example of the company’s “changing its story.” She said the district’s attorneys are seeking to have the contract declared an “energy savings performance contract” as authorized under 67-5711D and often referred to as an ESCO.
    “If this is not an ESCO contract, then it would seem that McKinstry misrepresented its intentions to our entire community,” Crocker said.
    McKinstry spokeswoman Heidi De Laubenfels characterized the School District’s attempt to have the contract declared illegal as an attempt to get “facility improvements for free.”
    “The district is now seeking to avoid payment by claiming that the transaction was illegal,” De Laubenfels wrote in an email to the Idaho Mountain Express. “McKinstry is moving to dismiss all claims based on that assertion.
    “All along, our objective has been to stay focused on the true essence of this argument. McKinstry, along with local Blaine County subcontractors, delivered tens of millions of dollars worth of work, on time, given mutually agreed upon project schedules at the district’s direction. That work had significant value and we think we should be paid for it.
    “That is truly what this dispute is about. We are confident that distracting, baseless claims in this case will be dismissed on summary judgment prior to trial.”

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